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April 27, 2001 (202) 6691-3550

Treasury is changing the way it calculates the auction allocation percentage for competitive awards at the high rate or yield by carrying the percentage awarded at the high out to two decimal places. The change takes effect with the weekly bill auctions on April 30, 2001, and will apply to all bill, note, and bond auctions. This new, more precise allocation method will reduce the amount borrowed in most auctions to a figure much closer to the offering amount, allowing Treasury to trim the total amount awarded by as much as $1 billion each year.

Until this change, the percent awarded at the high was calculated by dividing the par amount needed to cover the offering by the par amount of bids tendered at the highest rate or yield. The resulting decimal was rounded up to the next whole percentage point (e.g., to 18% from a decimal of .170322), and that percentage was used to prorate all awards at the highest accepted rate or yield. Usually, the effect of rounding to the next whole percentage point resulted in larger awards at the highest accepted rate or yield than were needed to cover the offering amount.

Beginning April 30, 2001, auction results press releases will show the allocation at the high rate or yield expressed in hundredths of a whole percentage point. Instead of the 18% that would appear in the example shown above, the auction results would show a 17.04% percent allocation rounded up to the next hundredth of one percent from the .170322 figure.

The allocation percentage is only applied to competitive tenders accepted at the highest discount rate or yield in order to ensure that Treasury awards a par amount of securities close to the public offering amount. The change does not affect TreasuryDirect or commercial non-competitive bidders.